The 2018 Housing Market
Many people have asked me over the last couple of months what the real estate market might have in store for us in 2018. It’s hard to predict exactly what might happen or when it might occur. However there are leading economists and professionals thinking about this and researching trends and predictions so that we can be informed when making real estate decisions in the future. As a real estate professional I receive this information throughout the year, and want to share it with you so that you have the latest information as well. However, remember that these are just predictions and the market is always changing and can be very different in specific areas or regions of the country. So, if you have questions about your home’s value or about the St. Louis housing market, please give me a call. I am always happy to help.
How far will mortgage rates rise? For people purchasing a home or investment property, this this is definitely something to consider. Zillow surveyed 100 experts in the field, and although their predictions differed, on average they predicted the rates may rise to 4.5 percent by the end of the year. Which is still far below the the threshold at which potential buyers leave the market, which is about 6 percent. Realtor.com predicts that these increases will happen in 3-4 increases over the coming year.
Currently, many local markets have historically low inventory which has increased the prices of these listings. Experts predict that the housing shortage will continue in 2018. This may be good for the seller, but if you are selling and buying a new property it can be tricky. A homeowner may have no trouble selling their home, but may wait to list it until they can find something that they want and that is affordable, which may be difficult. And, if they can’t find what they want, they may not list at all.
Increase in mortgage rates and the new tax reforms could chip away at property values, and make property less affordable. The experts predict large fluctuations in the market the first half of the year, as people are figuring out how the new tax laws affect them and wait to see what happens with interest rates. There are some areas of the country that will see dramatic changes in tax deductions. These changes will have the largest impact on expensive metropolitan areas like New York and California, but if you have questions on how it might affect you, let me know. Economists state “that if the economy continues to grow, a widening gap between home values and income levels could close in 2018, thereby creating the perception of affordability for millions of homebuyers - that is until the mortgage rates begin to climb”
Millennial and First-time Buyer Trends
Keep a close watch on “urban suburbs” in 2018. These have become very appealing to millennials searching for walkable neighborhoods and highly ranked schools. Millennials have changed the way we think about suburbs. As a group, these home buyers tend to look for areas with single family homes or townhouses in higher density settings in neighborhoods with lots of amenities. They may continue to spark revitalization efforts in affordable areas near downtowns. For this reason, home renovation services will remain in high demand.
There is one obstacle that could prevent millennials from becoming the most active first-time home buyers, and that is student debt. There are many homeownership programs that could help make a purchase possible for them, they will just need to find what works best for them.
Baby boomers, however were thought to be making the move to smaller homes in more affordable communities. This hasn’t happened as predicted. It may be because baby boomers are staying at their jobs longer, or perhaps their desire to age in place and not move. This could result in a freeze in the housing market for those seeking to “upsize” in the future.
Do you need help navigating this complex market? Let me know how I can help.
** Thank you to Inman staff writers for informative market information and insights.**